12 Solar Power Myths and the Saving Grace of a Worthwhile Cause

Over the course of its terrestrial history, solar industry growth has primarily relied on incentives and subsidies for growth and as a mark of success, instead of healthy margins and profits. For most of the industry's history buyers of technology (cells and modules) have enjoyed price control. The primary reasons that buyers have controlled the price function for most of the PV industry's history are: a) The industry requires incentives/subsidies for its growth b) Without subsidies there is not pull for the technology c) There are many substitutes, both renewable and conventional d) all substitutes enjoy some degree of subsidies themselves e) the task of educating consumers that owning the means of electricity production offers more control than continuing to rent electricity is daunting and f) the industry continues to promise prices so low that continued investment in high quality technology and R&D is almost impossible.

The solar industry – referring to all solar technologies and the entire solar value chain – has courageously persevered in the face of significant doubts, cheap (and subsidized) conventional energy, and the powerful lobbies of conventional energy along with its own sometimes questionable choices. The industry has persevered primarily because of its belief that solar is the energy technology of the future. In terms of success, believing will not necessarily make it so, and years of battling entrenched conventional energy remain ahead, but without this core belief in the rightness and inevitability of victory, solar will not succeed. It takes courage to plow ahead during tough times and relatively easy times simply because you believe that you are on the right path.

As demand for solar products is fragile, and the industry’s incentives are controlled by governments (who often do not understand the technology or the industry), participants tend towards extremes in terms of wishful thinking often seeking out information that confirms its hopes. It is difficult for any group or individual to avoid confirmation bias, which is the tendency to seek out information and data that supports a closely held view. This behavior brings out the best and the worst of an industry that has overcome much in its ~40 year history, has more to overcome, but no matter what, is not going away. Success will, however, continue to require hard work, development of new business models, cost reduction and, yes, believing in the impossible.

Solar Myths:

1. Crystalline Technology is the technology of the past

In 2004, the Germany feed-in-tariff incentive model began to stimulate demand in Germany and was quickly copied by other countries. Noting the apparent security of the FiT, investors became interested, and the market in Europe surged. This period of strong demand coincided, unfortunately, with a shortage of polysilicon. This shortage had been expected by the solar industry for decades. Prices of polysilicon increased signs, supplies of crystalline modules were constrained and these factors, coupled with high demand, led to a significant increase in the price of c-Si cells and modules. Despite the high price of polysilicon, manufacturers of c-Si technology – for the most part – began enjoying higher margins. At the beginning of this period, there was insufficient capacity of thin film technologies to fill the gap. As prices increased, investors, venture funds and other began to show significant interest in thin film technologies. Fairly quickly, the end of c-Si was pronounced along with a rapid increase in market share for thin film technologies – widely viewed at this time as the technology of the future. Regarding the death of c-Si technology, consider Mark Twain, commenting on the announcement of his demise: “The reports of my death are greatly exaggerated.”

Figure 1 PV Module ASPs to the first buyer, 2001 – 2012

Figure 2 Crystalline & Thin Film Technology % Contribution, 2001-2011

2. Thin films are dead

Referring again to Mark Twain, “The reports of my death are greatly exaggerated,” the pendulum has swung back and the death of thin film technologies is often heard. The primary reason for the current lack of confidence in the future of thin film technologies is current low price of crystalline technology. The assumption is that thin films cannot compete with crystalline technology’s progress in this regard. This assumption ignores the confusion over the difference between inventory pricing and the average price to the first buyer as well as the fact that no technology manufacturer – globally – is currently healthy. If the current low prices for PV modules were progress, then the industry would be enjoying profits, investing in R&D and encouraging technology startups instead of watching a steady march into bankruptcy.

Table 1: Off Grid Applications

3. Micro-grids are the next big thing

Incentive driven industries – particularly those without pull and where competing substitutes enjoy significant advantages as well as those in which the incentive environment is insecure, will grasp at any potential savior that presents itself – much like a drowning person grasps at any floating object in his/her reach. Currently interest in the off grid market and its many applications is experiencing a renaissance of sorts. As the solar industry enters a low incentive environment, micro-grids (or village grids) are gaining attention as a potential multi-gigawatt market for PV and other solar technologies. It is true that the potential for micro-grids is strong – it has always been strong. The reality of serving this market however remains non-trivial. Granted, replacing inefficient, expensive and polluting diesel generators is a laudable and environmentally necessary goal, and, granted the use of solar in hybrid configurations continues to have potential, but, obstacles to deployment continue to include multiple levels of bureaucracy (down to the local village level), uneven support by utilities, affordability, lack of incentives, setting up and administrating payment for generated electricity, acceptability by local populations, O&M training, among other concerns specific to working in developing areas of the world and with off-grid applications. That there is demand for electricity and potential for this application is unquestionably true, this aside, serving the population most in need of the micro-grid sub-application is also expensive, time consuming and not for the faint of heart. During the successful early FiT years the solar industry could have planned for its low incentive future by developing a micro-grid business model – it did not and so is unprepared to mine the multi-gigawatts of potential that are currently exciting to contemplate and daunting to serve. The off-grid applications dominated PV industry demand through 1999. In 2011, off grid was 1% of the multi-gigawatt market for PV systems.

(Table 1, above) Share of PV Market Demand, 1991 - 2011

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13 Comments

Concerning the hog farmer, I don't think the complementary aspect of biogas and PV electricity was stated sustinctly. For baseload demand, you don't need PV storage. Storage of biogas is easier than storage of electricity. We don't know what his personal load demand is nor do we know what he can get for selling electricity but in general such intgegrated technologies on a distributed network can make a lot of sense if one can get past the existing biases.

@ Barry. I was going to ask, but it looks like your Mom knows you talk like that. I think it is best to take an integrated approach to implementing technologies. In a business operation, processes are interrelated and making a change in one effects the others. It is amazing how efficiency can be increased by taking this approach.

If you think about it, William's choice is not between processing manure with Black Soldier Flies and PV, but rather processing the manure by creating methane or using Black Soldier Flies. I'll give you the benefit of the doubt and say you are trying to make a useful contribution to this discussion.

@ William Butler. I also live in NC. My name is Bill but I am using my Sweetie’s computer right now. Glad to see you making methane. Some options to look at are: 1. Thermal storage in the form of hot water or stored in the ground like geothermal (for heating buildings, your home and water) and chilled water or ice for air conditioning and 40 degree refrigeration. For any thermal loads that can be met this way, the collection (thermal collectors) and storage is less expensive. Then look at the PV. 2. Compressed air storage. The compressed air can be used to power a motor that can replace any electric motor. 3. Using Black soldier fly larvae to process manure. The larvae are a high grade livestock and fish food and can be processed into a biodiesel fuel and a high grade compost is also produced.

'8. PV cell and module manufacturing outside of Asia is dead' It is if you want it to be but it doesn't have to be the case. With highly automated manufacturing, labor is a small component of cost; however, high automation requires consistently high volume. Once you have volume, particularly a large local market, you can offset labor costs against transportation costs. This involves a major commitment and patience as well as supportive government policy. In today's market that means facility footprint >400 MW/a but it would be very difficult to do this right now given the excess of capacity in the market. The opportunity is that a substantial portion of capacity is in small marginal producers that can and will be run off: even in China, go big or go home seems to be the game plan. But it wouldn't be easy: the reality for North American PV manufacturing is that much of the commodity supply chain extends into Asia where, not surprisingly, industry suppliers are co-located with major manufacturers. A healthy domestic industry can't happen overnight. Also, the current WTO onslaught against domestic content rules and subsidies constrains the degree to which governments can facilitate domestic manufacturing. However, this is definitely a myth however popular it may be with modern day American Luddites.

'6. An industry-changing new PV technology is just around the corner' That's always true but not in the way that most people would like to think - new technologies haltingly infiltrate into the business they don't suddenly leap out. The first semiconductor solar cell was made in 1883, the first silicon cell in 1954. Almost every aspect of PV manufacturing has changed in the 20+ years of personal hands-on experience - a few things roll out quickly but most arrive slowly and many 'promising' technologies founder on practical realities. The reality behind this myth is that there are no magic bullets while many would like to believe there are i.e. just one single new technology that will trump all the rest.

'10. Moore's Law applies seamlessly to PV technology price/cost'. Wanting to draw an analogy between PV and semiconductor manufacturing is a fallacy in itself. Having worked both patches, I can say there is little in common between the two in terms of logisitics, manufacturing tools and processes. Except for deposition there is really little in common and even there the parameters are vastly different. Forcing this analogy is a bit like comparing the business models of jewelry stores and grocery stores.

Myth 10 about Moore's Law not applying to the solar industry is true, however the "experience curve" as in most industries does apply, where each doubling of the total volume will result in lower prices.

I liked your explanation with Myth 11. With comparing the solar installations to cars. This is a diverse market where areas with good sunlight should use concentrated photovoltaics (CPV). Also if panels are on your rooftop, since the space is limited, the higher efficiency panels probably make more sense while for a large bulk maegawatt scale electrical generation, space may not be as big of an issue.

William, maximum return on investment is obtained by maximum reduction of your electrical bill in most cases based on your actual power load usage. Today, both pole mounted optically enhanced full tracking systems and electronically and optically enhanced rooftop fixed systems are designed with storage and lower cost hardware to match your actual load use and lowest capital costs.

Typically, utilities will charge you retail rates but pay you wholesale rates. Thus by including electrical storage you actually maximize your return on investment. No since producing power at times that you are not using it, just to sale it to the utility and then have to buy power back when you need it. My company provides storage as part of the rooftop or pole mounted full polar tracking systems. Thus we can provide the most economical method to provide you power that meets your actual needs. jnistler@yahoo.com

I am a NC Pork Producer and we produce renewable energy from our swine waste by using our biomethane gas to run a generator and put electricity back into the grid.
I am also interested in a small solar farm. (1-5 MW) I usually hear the too expensive, and too long to wait for a pay back excuses, and it is a cause for concern. When one is looking at a 4 or 5 million dollar minimum investment in a project such as this you have to know up front that it will cash flow. The above article and comments are encouraging. At this point I do think that solar investments can be economically feasible and I would appreciate any bits of information that could help me make a final decision on going forward.

Incumbent energy producers (fossil fuels) and distributors (utilities) continue to win the messaging war when they characterize solar as "expensive." In almost every public forum I hear them say something like "solar is nice, but of course it is too expensive..." These misstatements are too often accepted by our industry, repeated by journalists, and become part of the conventional wisdom about solar.

It's our fault when our industry is tarred by the "too expensive" brush. Every individual in our industry needs to push back when they hear these untruths. Solar panels have a 1.5 year energy payback, in many locations less than a 7 year simple payback, and with financing a positive cash flow from the first year. Now that hardware costs have dropped so significantly we need to stand up and explain to everyone -- especially policy makers and journalists -- that solar is the cheapest, cleanest and most reliable source of energy.

Sadly, the myth concerning unreasonable energy payback times still lurks in the dark corners of collective popular consciousness. While modules produced in 1970 may have taken decades to recover their invested energy, today's modules pay back in a couple of years (see Fig. 2 of http://www.clca.columbia.edu/240_SolarToday%20June12_c.pdf ).

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